I always tell clients to plan for today but be prepared to make changes as circumstances change. If Joe Biden is elected as our next President (2020 election), clients of estate planning attorneys across the country will have a lot of unfavorable changes to accommodate. The changes will almost certainly have a detrimental impact on capital investment in the US.
According to Hank Adler, in "Amazing Income and Estate Tax Rates", Biden wants to:
- Eliminate what is called the “step-up in basis” on assets received from an individual's estate after they die.
- Add to that that he plans to tax all capital gains at 39.6 percent.
- Combining these proposals would create an effective estate tax rate of almost 100 percent.
Add to this that Biden wants to:
- Increasing regular income tax rates by 2.6 percent.
- Increase the corporate tax rate to 28 percent from 21 percent.
Mr. Adler does an interesting calculation in his article. He takes Mr. Jeff Bezos (world's richest man) as an example. [Directly from the Adler article]: Mr. Bezos created Amazon and has virtually no basis (cost) in his shares. Today, if he died and left the stock to his heirs, the estate would pay a 40 percent estate tax and, when his heirs sold their stock, they would have no accompanying income taxes. If as Mr. Biden proposes, they were then faced with a federal income tax (and presumedly a state income tax) upon the sale of the Amazon stock, they would face another tax of 53 percent. Yes, ultimately a 93 percent tax on the estate assets.
For anyone that started a successful business or owns a family farm, Biden's notions would be the end of those dreams following the death of the owner. His plan is also a great way to shrink the GDP and slow the return of manufacturing to the USA.
William Hoobler Reply
Posted Jul 14, 2020 at 16:31:12
Thanks for sharing!
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